Russ Mould

Equity markets continue to show resilience despite a whirlwind of worries around AI spending, high bond yields , inflationary pressures and the potential for multiple interest rate hikes over the coming 12 months.

Big technology companies are pouring vast sums into artificial intelligence, creating a boom for the businesses supplying everything from computer chips to data centres. But as spending climbs and cash flow comes under pressure, investors face a growing question: will AI ultimately generate enough demand and productivity gains to justify the investment, or could the spending boom end painfully?

European markets faced a tricky start on Monday as the political unrest in France shows little sign of letting up and as AI and geopolitical concerns continue to weigh.

Perhaps the bulk of the upward re-rating of bank stocks is complete, so that any further upside has to come from earnings growth.

Last night's tech recovery on Wall Street didn't carry over into Asian markets with AI-related names in the region facing renewed pressure on their share prices.

The FTSE 100 was a laggard on Wednesday morning despite a recovery in Asian markets and tentative gains elsewhere in Europe.

However, it outperformed Asian and European counterparts thanks to a decent showing from its contingent of energy stocks and traditionally defensive names.

Barclays is the first of the Big Five FTSE 100 banks to report its third-quarter results on Thursday, and a summertime slump in its share price suggests that things maybe cannot get much better from here – even if analysts expect record profits across the quintet in each of 2026, 2027 and 2028, along with bumper dividends and share buybacks.

The FTSE 100 made a solid start to Budget week as oil prices eased back and despite weak trading across Asia.

ONE potential source of the best longterm, risk-adjusted returns is to treat what is doing well (and may be expensive as a result) with caution and instead rootle around for stocks or assets that are doing badly.